In this article, we will take a look at the 10 AI stocks that will skyrocket.
Enterprise AI is expected to Drive Earnings in 2025
Some investors are heavily scrutinizing Big Tech’s AI spending. Despite these hefty expenditures, Big Tech has been enjoying solid revenues and earnings growth. Yung-Yu Ma, CIO at BMO Wealth Management, recently joined Yahoo Finance to shed light on the overall AI sector outlook heading into 2024.
Ma believes that companies are increasing their investments in AI in anticipation of higher returns. He said that it makes sense that the market is less likely to be enthusiastic about this situation. Ma argued that while spending on AI is likely to increase, there is a certainty that the results will soon show, maybe by the end of 2025.
He added that the market will probably see healthy earnings growth in 2025. Spending is broadly going to drive these earnings, particularly AI and its different use cases such as data centers, electricity grids, and other infrastructure. He expects an overall growth in valuation and shared that Big Tech is extremely confident and committed to pouring investment into the sector.
A Glance at Some Revolutionary AI Startups
2024 has been quite a year for artificial intelligence. Existing startups like Anthropic and Databricks have been performing exceptionally well and transforming the industry.
Anthropic is an AI safety and research company behind the OpenAI rival, Claude. On November 24, Anthropic extended its partnership with AWS, involving another $4 billion investment, bringing the total to $8 billion. The partnership also positions AWS as Anthropic’s primary cloud and training partner. Keeping up with the partnership, on December 4, Anthropic began optimizing Claude models to be able to run on AWS Trainium 2.
Databricks, the data and AI company, is another AI startup crucial to the AI revolution. Some of the products by Databricks include data management solutions, data warehousing, real-time analytics, data sharing, and data governance. The company is expanding to new heights. On November 6, the company partnered with KT Corporation to boost data and AI innovation in Korea. Following the trend, on November 20, Databricks announced it saw 70% annualized growth in its French business and has launched a new office in central Paris.
Now that we have studied developments in the artificial intelligence industry, let’s take a look at the 10 AI stocks that will skyrocket.
Our Methodology
To come up with AI stocks that will skyrocket, we consulted media reports to shortlist stocks that are expected to perform exceptionally well according to analysts and strategists. After consulting 10 similar rankings on the internet we examined the Street-High upside for each stock and picked the ones with the highest upside, as of December 3, 2024. Our list is in ascending order of the street high upside as of December 3, 2024. We have also mentioned the hedge fund sentiment for each stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 AI Stocks That Will Skyrocket
10. Meta Platforms Inc (NASDAQ:META)
Street High Upside as of December 3, 2024: 37%
Number of Hedge Fund Holders: 235
Meta Platforms Inc (NASDAQ:META) is the technology conglomerate behind Facebook, Instagram, Threads, and WhatsApp, with over 3 billion daily active users across all its platforms. Over the past few months, the company has leveraged its expertise in AI and augmented reality, having launched its debut AR glasses, Orion, and its mixed reality headset, Meta Quest 36, in September.
The company is using artificial intelligence to simplify daily tasks and help solve mission-critical tasks at a state level. On November 4, Meta Platforms Inc (NASDAQ:META) announced that it is making Llama available to government agencies in the United States. In addition to that, on November 20, the company introduced AI backgrounds and several other features for Messenger calling, also ensuring that its customers enjoy a more entertaining social media experience.
Overall, Meta Platforms Inc (NASDAQ:META) has a solid business model with a prominent growth trajectory. The company is pioneering artificial intelligence and is expected to spend billions to support the goal. Analysts are also bullish on the stock and their high price target points to an upside of 37% from current levels.
Rowan Street Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q2 2024 investor letter:
“We are pleased to report that Meta Platforms, Inc. (NASDAQ:META), our largest position in the fund, has delivered a remarkable performance, +450% since our November 2022 note. Our investment in Meta dates back to 2018, with an average cost basis of approximately $172 per share. Today, the stock trades around $535, reflecting a 3x return over the six-year holding period, equating to a 20% annualized return.
We would like to remind you that achieving these types of returns is never a straight path. From time to time, we might experience volatility — that’s simply part of the investment journey. In fact, wealth creation and volatility go hand in hand. There’s no escaping it; it’s the “price of admission” the market demands. If you take a look at the chart below, you’ll notice the drawdowns META stock has faced over the years, with 2022 standing out as a particularly challenging period, where the stock saw a 75% drop….. ” (Click here to read the full text)
9. Adobe Inc. (NASDAQ:ADBE)
Street High Upside as of December 3, 2024: 38%
Number of Hedge Fund Holders: 123
Adobe Inc (NASDAQ:ADBE), also known as the creative giant, has been disrupting the generative AI industry. The company’s AI tools allow users to add and remove images, generate high-quality images, create personalized content, and automate workflows. Some of the major products include Adobe Firefly, Adobe Express, Acrobat AI Assistant, and Adobe GenStudio.
The company’s journey to becoming a GenAI giant has been prominent over the last few quarters. Previously in June, Adobe Inc (NASDAQ:ADBE) announced that its Adobe Content Hub is now generally available with the Adobe Experience Manager, a digital asset management system with a database of images and videos. Then in August, the company announced the general availability of Adobe Journey Optimizer B2B Edition on its Adobe Experience Cloud, allowing brands to identify and personalize experiences for buying groups using AI.
More recently in October, Adobe Inc (NASDAQ:ADBE) launched the Firefly Video Model in beta, expanding its family of creative generative AI models. The publicly available video model is the first model designed for safe commercial use. The company also accelerated its image-generation capabilities. On December 3, the company announced a partnership with Amazon Web Services to offer the Adobe Experience Platform on AWS, positioning it as an emerging leader in personalized AI services.
